Ligand Reports Record Results for Third Quarter 2001: Total Revenues Up 41%, Per Share Loss Down 46%.

Business Editors & Health/Medical Writers

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SAN DIEGO--(BW HealthWire)--Oct. 26, 2001

Product Sales Up 76%, Operating Loss Down 56% to Lowest Level Since

Company Began Commercial Operations

Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) today reported total revenues for the third quarter ended September 30, 2001, of $19.2 million, compared to $13.6 million for the same period in 2000, an increase of 41%. Net loss for the third quarter of 2001 was $7.7 million ($0.13 per share), compared to a net loss of $13.4 million ($0.24 per share) for the same period in 2000, representing an improvement of 42% (46% per share).

"In the third quarter of 2001, Ligand's revenues again accelerated substantially compared to the same period of 2000, led by the key value drivers

ONTAK(R) and Targretin(R) capsules," said Paul V. Maier, Senior Vice President and Chief Financial Officer. "Third quarter product sales were a record $11.4 million, a 76% increase over the third quarter of 2000, and our ninth consecutive quarterly product sales increase. At the same time, we continued to maintain tight control of our R&D and SG&A expenses, resulting in a 56% decline in operating losses to $4.6 million, the lowest level since we began commercial operations in 1999. We look forward to continued strong revenue growth and further declines in operating losses for the rest of 2001 and into 2002, consistent with our near-term goal of operating profitability."

Ligand's total revenues for the first nine months of 2001 were $53.7 million, compared to revenues of $34.3 million in the first nine months of 2000, an increase of 57%. For the first nine months of 2001, net loss was $29.9 million ($0.50 per share), compared to a net loss of $59.7 million ($1.08 per share) for the same period in 2000 (after the cumulative effect of a change in accounting principle), representing an improvement of 50% (54% per share). As of September 30, 2001, Ligand had cash, cash equivalents, short-term investments and restricted cash of $41.8 million.

Product sales were $11.4 million in the third quarter of 2001, an increase of 76% compared to third quarter 2000 sales of $6.5 million, and an increase of 14% compared to second quarter 2001 sales of $10 million. This strong product sales growth occurred despite one-time interruptions in some patient treatments and shipments in the two weeks following September 11, which are not expected to have a recurring effect. Sales growth was driven by:

-- ONTAK, which had third quarter 2001 sales of $6.5 million, up 124% over the
same period of 2000;

-- Targretin capsules, which had third quarter 2001 sales of $3.2 million, up
36% over the same period of 2000;

-- Targretin gel and Panretin(R) gel, which had combined third quarter 2001
sales of $1.7 million, up 60% over the same period of 2000.

Product sales for the first nine months of 2001 were $30.0 million, compared to $16.2 million in the same period of 2000, an increase of 85%. Product sales trends for the first nine months were similar to those seen in the third quarter results.

Highlights of Third Quarter 2001

Strategic Sales Force Expansion to Accelerate Morphelan(TM) Launch

In anticipation of the U.S. launch of Morphelan next year,

pending regulatory approval, Ligand made a strategic decision

to form a third sales force of approximately 20

representatives to target general pain centers not served by

the company's existing oncology representatives. "This

decision reflects our excitement about the opportunity we

believe we have with Morphelan," said Thomas Silberg, Senior

Vice President, Commercial Operations. "If approved,

Morphelan will be launched into our largest initial market to

date, and forming a third sales force will help us drive

upside sales potential in 2002 and 2003." The U.S. Food and

Drug Administration (FDA) has issued to Elan Corporation,

plc, Ligand's licensor, an approvable letter regarding the

New Drug Application (NDA) for Morphelan, and Elan has

responded to FDA questions.

Milestone Progress on Major Corporate Partner Products

-- Ligand earned an undisclosed milestone payment from Eli Lilly

and Company (NYSE: LLY) as a result of Lilly's filing an

investigational new drug application (IND) with the FDA for

LY519818, a novel PPAR (peroxisome proliferation activated

receptor) agonist for the treatment of type II diabetes and

metabolic diseases.

-- Ligand earned a $1.0 million milestone from TAP Pharmaceutical

Products when TAP declared LGD2226, a selective androgen

receptor modulator (SARM), a clinical candidate for the

treatment of major androgen-related diseases and disorders,

such as hypogonadism, osteoporosis, male hormone replacement,

and male and female sexual dysfunction. The two companies hope

to file an IND for LGD2226 with the FDA as early as next year.

Detailed Results

Loss from operations was $4.6 million in the third quarter of 2001, compared to $10.4 million in the same period of 2000, a decrease of 56%. For the first nine months of 2001, loss from operations was $20.6 million, compared to $36.5 million for the same period in 2000, a decrease of 44%.

Gross margin on product sales improved to 68% in the third quarter of 2001, compared to 65% in the same period of 2000. For the first nine months of 2001, gross margin was 68%, compared to 61% in the first nine months of 2000. As product sales continue to grow, gross margins should improve further as the technology amortization component of cost of sales declines as a percentage of sales.

Research and development expenses were $12.9 million in the third quarter of 2001, compared to $13.2 million for the third quarter of 2000, a decline of 3%. For the first nine months of 2001, R&D expenses were $38.5 million, essentially flat compared to the same period in 2000.

Selling, general and administrative expenses were $7.2 million in the third quarter of 2001, compared to $8.6 million for the same period in 2000, a decrease of 16%. For the first nine months of 2001, SG&A expenses were $26.2 million, compared to $25.9 million in the same period of 2000.

Web Cast Conference Call

Ligand Pharmaceuticals will host a live web cast, open to all interested parties, of a conference call during which David E. Robinson, Ligand Chairman, President and CEO, and Paul V. Maier, Senior Vice President and CFO, will discuss financial results for the third quarter of 2001. The web cast will be available at http://www.streetevents.com and at http://www.ligand.com (Investor/Public Relations page) on Oct. 29 at 8:30 a.m. Eastern Standard Time.

Ligand Pharmaceuticals Incorporated

Ligand Pharmaceuticals Incorporated discovers, develops and markets new drugs that address critical unmet medical needs of patients in the areas of cancer, skin diseases, men's and women's hormone-related diseases, osteoporosis, metabolic disorders, and cardiovascular and inflammatory diseases. Ligand's proprietary drug discovery and development programs are based on its leadership position in gene transcription technology, primarily related to Intracellular Receptors (IRs) and Signal Transducers and Activators of Transcription (STATs).

This news release may contain certain forward-looking statements by Ligand that involve risks and uncertainties and reflect Ligand's judgment as of the date of this release. Actual events or results may differ from Ligand's expectations. There can be no assurance that Ligand will increase revenues from currently marketed products or reduce operating loss during the remainder of 2001 or into 2002; that Ligand will be able to achieve its near-term goal of operating profitability; that the results from the periods discussed in this release are indicative of results to be expected for the remainder of 2001 or future periods; that any products under development by Ligand or any of its collaborative partners will receive approval from the FDA or other required regulatory authorities to market any of these products; that, if successfully developed and thereafter approved, there will be a market for the drugs; that collaborative arrangements will be successful or continued; or that Ligand will receive any milestone payments for the discovery and/or development of any compounds. Additional information concerning these and other risk factors affecting Ligand's business can be found in prior press releases as well as in Ligand's public periodic filings with the Securities and Exchange Commission, available via Ligand's web site at http://www.ligand.com. Ligand disclaims any intent or obligation to update these forward-looking statements beyond the date of this release.

Note: Targretin(R) and Panretin(R) are registered trademarks of Ligand Pharmaceuticals Incorporated, and ONTAK(R) is a registered trademark of Seragen, Inc., a wholly owned subsidiary of Ligand. Morphelan(TM) is a trademark of Elan. Full prescribing information for Ligand's products may be obtained in the U.S. from Ligand Professional Services by calling toll free 800-964-5836, or on Ligand's web site at http://www.ligand.com.

Ligand Pharmaceuticals' releases are available on the World Wide Web at www.businesswire.com/cnn/lgnd.htm.

                  LIGAND PHARMACEUTICALS INCORPORATED
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)
                 (in thousands, except per share data)

                            Three Months Ended     Nine Months Ended
                               September 30,         September 30,
                            ------------------     -----------------
                           2001         2000(a)    2001        2000(a)
                           ----         -------    ----        ------
Revenues:
 Product sales           $ 11,406    $  6,477    $ 30,015    $ 16,234
 Collaborative research
  and development and
  other revenues            7,768       7,114      23,683      18,044
                          --------    --------    --------    --------
      Total revenues       19,174      13,591      53,698      34,278
                          --------    --------    --------    --------

Operating costs and
 expenses:
 Cost of products sold      3,645       2,238       9,561       6,328
 Research and development  12,882      13,229      38,478      38,480
 Selling, general and
  administrative            7,206       8,560      26,249      25,938
                          --------    --------    --------    --------
      Total operating
       costs and expenses  23,733      24,027      74,288      70,746
                          --------    --------    --------    --------

Loss from operations       (4,559)    (10,436)    (20,590)    (36,468)
                          --------    --------    --------    --------

Other expense, net         (3,185)     (2,969)     (9,350)    (10,105)
                          --------    --------    --------    --------
Loss before cumulative
 effect of a change in
 accounting principle      (7,744)    (13,405)    (29,940)    (46,573)
Cumulative effect on prior
 years (to Dec. 31, 1999)
 of changing method of
 revenue recognition           --          --          --     (13,099)
                          --------    --------    --------    --------
Net loss                 $ (7,744)   $(13,405)   $(29,940)   $(59,672)
                          ========    ========    ========    ========

Basic and diluted per
 share amounts:
Loss before cumulative
 effect of a change in
 accounting principle    $  (0.13)   $  (0.24)   $  (0.50)   $  (0.84)
Cumulative effect on prior
 years (to Dec. 31, 1999)
 of changing method of
 revenue recognition           --          --          --       (0.24)
                          --------    --------    --------    --------
Net loss                 $  (0.13)   $  (0.24)   $  (0.50)   $  (1.08)
                          ========    ========    ========    ========
Weighted average number
 of common shares
 outstanding               59,581      56,605      59,633      55,341
                          ========    ========    ========    ========

      (a)Due to the retroactive implementation of SAB 101 in the fourth
quarter of 2000, the 2000 quarterly results previously published have
been restated.


                  LIGAND PHARMACEUTICALS INCORPORATED
                      CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                 September 30, 2001  December 31, 2000
                                 ------------------  -----------------
                                     (Unaudited)

Assets
 Current assets:
  Cash, cash equivalents and
   short-term investments              $  39,424           $  33,663
  Other current assets                    12,609              10,986
                                        ---------           ---------
    Total current assets                  52,033              44,649
 Restricted investments                    2,369               1,434
 Property and equipment, net               9,748              10,972
 Acquired technology, net                 38,641              40,924
 Other assets                             14,171              15,443
                                        ---------           ---------
                                       $ 116,962           $ 113,422
                                        =========           =========
Liabilities and Stockholders' Deficit
Current liabilities                    $  25,032           $  28,415
Zero coupon convertible senior notes      84,605              79,766
Convertible subordinated debentures       46,657              44,651
Other long-term liabilities               12,842              15,715
Stockholders' deficit                    (52,174)            (55,125)
                                        ---------           ---------
                                       $ 116,962           $ 113,422
                                        =========           =========